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Disposition

Understand disposition in Canadian real estate - what it means, when it happens, and how it affects ownership, taxes, and estate planning.

Disposition

June 06, 2025


What is a Disposition?

Disposition in real estate refers to the sale, transfer, or disposal of a property or asset by the owner, whether voluntarily or through legal or financial obligation.

Why Dispositions Matter in Real Estate

In Canadian real estate, disposition is a key event that can trigger capital gains tax and mark the end of property ownership.


Disposition includes:
  • Selling a property
  • Gifting or transferring to a family member
  • Foreclosure or expropriation
  • Change in use from personal to rental or vice versa



The Canada Revenue Agency (CRA) requires that any disposition of property be reported, with capital gains calculated using the adjusted cost base.



Understanding disposition is essential for estate planning, tax reporting, and assessing legal or financial impacts of property sales.

Example of a Disposition in Action

When a homeowner sells a vacation property, it is considered a disposition, and they must report the capital gain to the CRA.

Key Takeaways

  • Occurs when property is sold or transferred
  • Can be voluntary or court-mandated
  • Triggers capital gains tax for non-principal residences
  • Must be reported to the CRA
  • Relevant for sales, gifts, and estate plans

Related Terms

  • Adjusted Cost Base
  • Capital Gains Tax
  • Legal Title
  • Transfer of Ownership
  • Estate Planning

Additional Terms

Public Realm Improvements

Public realm improvements are enhancements to public spaces such as sidewalks, parks, plazas, and streetscapes, often funded or contributed by. more

Mortgagee in Possession

A mortgagee in possession is a lender who takes control of a property after borrower default, but before foreclosure or power of sale. The lender. more

Lease Surrender Agreement

A lease surrender agreement is a negotiated contract between a landlord and tenant that ends a lease before its scheduled expiration. Terms may. more

Green Infrastructure

Green infrastructure refers to natural or engineered systems that manage stormwater, reduce heat, and improve sustainability in developments.. more

Escrow Holdback

An escrow holdback is a portion of funds withheld at closing and held in escrow until specific conditions are met, such as completion of repairs,. more

Underused Housing Tax

The Underused Housing Tax (UHT) is a federal annual 1% tax on the value of vacant or underused residential property owned by non-resident,. more

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